On the road up again
A string of upbeat news and stats about the Queensland property market is giving investors reasons to believe that the state’s hiccups of the last few years are finally over
While Sydney and, surprisingly, Melbourne are surging faster than expected, Brisbane has only recorded a modest increase in property values during the past 12 months. According to RP Data, dwelling values have risen by just 0.8% in the last 12 months, compared to growth of 6.5% in Sydney and 4.3% in Melbourne.
The good news is that some indicators are showing this is about to change.
The Real Estate Institute of Queensland (REIQ) reported a 40% increase in sales volume for units and townhouses during the June 2013 quarter over the same period last year.
While the June quarter is usually weakest of the four quarters throughout the year, REIQ chief executive Anton Kardash says that over the last 12-month period “this quarter was actually the second strongest and very nearly wore the crown as the stand out three-month period of unit sales activity.”
He adds that the market has sustained the growth momentum it recorded during the September quarter last year and says investors have been enticed by the attractive rental returns they can get. “No doubt investors have recognised the strong rental market, including low vacancy rates, and are taking the plunge,” he says.
However, first home buyers remain relatively absent, he adds. The report shows first home buyer numbers remain well below historical averages at just 11% of dwellings financed in June, a drop of 35% compared to June last year.
Australian Property Monitors senior economist Andrew Wilson says that while Brisbane’s housing market continues to record gradual increases in housing market activity, the results are mixed between regions, buyer types and price ranges.
However, properties in Brisbane’s established inner- and middle-ring suburbs remain popular with buyers, he says. “Investors are attracted by high yields, rising rents and solid capital growth potential.”
The Brisbane economy is also expected to perform strongly over the medium term, which will translate to increased demand for housing.
“There will be benefits from the lower dollar translating into increased activity in the mining and tourism industries,” says Wilson.
“The expected surge in job seekers from the southern states will lift the population significantly in southeast Queensland.”
Vacancies drop as rental demand surges
Another solid indicator of impending recovery is the falling vacancy rates across the state, which are translating to stronger yields.
REIQ reported that the vacancy rate across Brisbane had dropped to 2% in the June quarter, showing that competition among renters is high. A constricted rental market is evident in other major centres, all recording an average vacancy rate of less than 3%.
Suburb to watch
A diverse range of property – including low-medium density residential (LMR) zoned land (which allows for up to three storeys in a townhouse or apartment development) – makes the well-established, tree-lined suburb of Carina particularly attractive to developers and investors looking for immediate gains.
Belle Property Carina principal Andrew McSweeney says this feature, combined with the suburb’s proximity to the CBD and easy access to the Gateway Motorway, is a massive drawing card.
Local infrastructure is great, with easy access to good public transport, the motorway, parks, schools, childcare facilities, a range of eateries and shopping. A major Westfield shopping precinct is in the neighbouring suburb. There are also a number of heritage-listed sites, including the Old Cleveland Road Tramway Tracks.
McSweeney says there is an array of post-war homes, from timber three- and four-bedrooms on blocks of land ranging from 60sqm to 1,000sqm, to more modern brick homes in elevated pockets of Carina Heights. There has also been a lot of redevelopment in the area due to the availability of LMR-zoned land and no DCP restrictions, he continues. “I have seen a change to more large three- to four-bedroom, 120sqm to 180sqm double lock-up garage luxury townhomes.”
While Brisbane prices have seen a significant drop since 2009, Carina has fared reasonably well, McSweeney says. “It has been insulated from the more significant decreases, probably due to the proximity to the CBD and local offerings.” Over the last year, Carina prices have held firm and the demand for all types of property is strong, he adds.
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